Fujitsu: We'll go on the 'offensive' in fight for IT dollars

Conglomerate ready to grow as Japan starts recovery

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Japanese tech conglomerate Fujitsu had exactly as bad a first quarter of fiscal 2012 as it expected when it warned investors back in April. The company says it will be more aggressive in its pursuit of growth now that its home country is on the mend after of last year's earthquake and tsunami – and despite the uncertainties in Europe and an economic slowdown in the United States.

In the quarter ended in June, Fujitsu racked up ¥957.3bn ($12.1bn at the prevailing exchange rate between the yen and US dollar during the quarter), which was 2.9 per cent lower than in the year ago-period. The company had a net loss of ¥23.7bn ($300m), which was in line with projections but which was nonetheless deeper than the ¥20.4bn loss it had back in its first quarter of fiscal 2011. To be fair, the Great East Japan Earthquake had not yet fully impacted any Japanese companies this time last year. Provided the rest of the economies of the world don't collapse, Japan may soon be back on its feet, if somewhat hunched over.

"We are moving away from a defensive stance to go on the offensive, and we will challenge ourselves to achieve further growth," Masami Yamamoto, Fujitsu's relatively new president, said in a statement accompanying the financial results. "Moving forward, we will continue to go on offense with structural reforms, accelerate globalization, and create new services businesses."

Fujitsu's quarter was adversely impacted by decreased sales of logic circuits and optical transmission systems and rising procurement costs where components coming from European suppliers are priced in US dollars, not euros, and therefore saw a rise as the euro slides against the dollar.

Fujitsu cut research and development in a number of areas, particularly in mobile phones, but ramped up investments in networking gear because it, like every other systems vendor, wants to sell a complete stack to data center customers.

Fujitsu's Technology Solutions segment posted ¥627.1bn in revenues in the quarter ($7.94bn), down 4.9 per cent against the year-ago period, which was when Fujitsu began shipping the server nodes and interconnects for the Sparc64-based K supercomputer to the RIKEN lab in Kobe, Japan. This was a particularly tough compare for Fujitsu's server business, and adding to its woes was a decline in high-end system sales (particularly in the financial services sector) and across its Unix server lineup.

Luckily for Fujitsu, sales of data center networking gear as well as other network products (including mobile phone base stations) rose, as did services. All told, system revenues fell by 9.3 per cent to ¥113.4bn ($1.44bn), and this part of the business posted an operating loss of ¥4bn ($51m).

Technology services sales were ¥513.6bn ($6.5bn) in the quarter, down 3.8 per cent, and this part of the business pulled in an operating profit of ¥4.9bn ($62m), up 2.8 per cent and covering the issues in the systems biz.

Fujitsu's Ubiquitous Computing segment, which includes PCs and mobile phones, was a relative bright spot with sales down only four-tenths of a point to ¥234.6bn ($2.97bn). But operating income dropped 2 points to ¥2bn ($25m). Declining PC sales are the culprit, Fujitsu said.

Fujitsu's Device Solutions segment, which makes chips for the company's own systems as well as merchant silicon it sells to others, fell by 7.5 per cent to ¥130.3bn ($1.65bn), and it posted an operating loss of ¥3.6bn ($46m) for this segment. Manufacturing the Sparc64-VIIIfx processors for the K super had been bucking up this segment's numbers in the year ago period. Fujitsu said that its 300mm wafer bakers were "maintaining high utilization rates" and this is always important for a fab.

Due to the falling value of the yen and the increasing value of the dollar, as well as tweaks to its business projections due to the shifting global economy, Fujitsu has chopped its projections for sales for the first half of fiscal 2012 and the full year by ¥20bn, or $253m. Fujitsu now expects sales of ¥4.53bn, up 1.4 per cent, and a net income of ¥60bn, up 40.5 per cent, for the full fiscal year ended next March. ®